MARKET CLOSE: NZ shares fall as investors mull gains

Oct. 3
(BusinessDesk) - New Zealand stocks fell, Spark New Zealand
and Air New Zealand declined as investors mulled whether
recent gains had made the stocks fully priced. Meridian
Energy and Genesis Energy gained as traders were drawn to
the relatively high yield of the companies.

The NZX 50
index fell 8.243 points, or 0.2 percent, to 5236.994. Within
the index stocks were mixed, 22 fell, 23 rose and five were
unchanged. Turnover was $108 million.

Investors are
looking for earnings growth to justify the benchmark index's
2.2 percent rise in the September quarter. It outpaced the
US Dow Jones Index's 1.3 percent gain, while Australia's
S&P/ASX 200 Index declined 1.9 percent and the UK's FTSE
Index fell 1.8 percent in the same period.

"On a relative
basis New Zealand has performed exceedingly well in the last
wee while given the weakness we've seen in Australia, Europe
and the US," said David Price, a broker at Forsyth Barr.
"We've been saying for a little while that the market has a
lot of growth factored into it, and we need to see that come
through to support where it currently sits."

Spark,
formerly Telecom, which rose to a more than six-year high
last month, fell 2.4 percent to $2.905 and has gained 29
percent this year. Air New Zealand, the national carrier,
declined 1.3 percent to $1.94 and has gained some 26 percent
this year.

Offshore investors have been lured to the
local bourse for its relatively high yield while
international interest rates remain largely on hold in a bid
to stimulate economic recovery. Meanwhile, energy companies
have rallied in the lead up to and after the Sept. 20
general election, as it became clear there would be no
change in government. Opposition parties had vowed to
restructure the sector in a bid to push retail electricity
prices down.

"It's a market which
still yields pretty well on a price to earnings ratio basis.
We're not cheap but at the moment if you look at the
gentailers the yield on them is pretty good, and that's
attractive when you've got interest rates at all-time lows
pretty much everywhere," Price said. "Stocks with yields are
being relatively well supported."

NZX was unchanged at $1.23. The volume of trades on
the New Zealand stock exchange fell 4 percent to 103,458 in
September from the year earlier month, as an increase in
debt trades failed to make up for a decline in equity
trading.

Outside the benchmark index, Dorchester Pacific
was unchanged at 25 cents. The finance company now controls
50 percent of Turners Group NZ, formerly Turners Auctions,
triggering the car auction firm to pay shareholders a
special 15 cents per share dividend, an incentive to
shareholders to accept Dorchester's takeover offer. Turners
rose 0.3 percent to $3.12.

Abano Healthcare was unchanged
at $7. The Financial Markets Authority has filed civil
proceedings against Australian private equity firm Archer
Capital and Abano shareholder Peter Hutson, saying the
parties should have notified the market of their deal to act
together on a prospective takeover bid earlier than they
did.

The Wellington-based BusinessDesk team led by former Bloomberg Asian top editor Jonathan Underhill and Qantas Award-winning journalist and commentator Pattrick Smellie provides a daily news feed for a serious business audience.

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